86,400 and OnDeck are at the forefront of a mortgage revolution as more brokers turn to market-leading fintechs for fast and efficient access to financing for their clients.
Fintechs are paving the way for the digital transformation of financial services, especially in mortgage lending.
While 86,400 and OnDeck have been ahead of the game in using digital tools, brokers and their clients are embracing the technology as well, and this is largely due to the pandemic ending face-to-face meetings. to face.
Australian broker met Melissa Christy, Head of Loans at 86,400, and Nick Reily, Head of National Channel and OnDeck Partnerships, to learn more about how fintechs are changing the face of lending.
Christy says 86,400 was very happy to hear that he had been named Fintech Lender of the Year at the Australian Mortgage Awards for the second year in a row.
âOf the other finalists, we were the only lender dealing with residential mortgage loans,â says Christy.
“I think what sets us apart from other fintechs is that we are the only residential mortgage lender in the market with a streamlined digital process for brokers.”
This year 86,400 launched new products and technological features which also give it an advantage in the fintech space. One of them is the smartbank’s 85% LVR, without an LMI mortgage.
âOur product without 85% LMI has been very well received and has broadened our market to attract more customers,â says Christy.
âWe have not placed any restrictions on who can benefit from the product, and this is not a limited time offer. You don’t have to be a first-time buyer or a buyer; it is also for customers who wish to refinance at a better deal, and the product also has no restrictions on the loan amount.
âThis year, we also launched our direct (online) channel and introduced OCR Labs to make the entire VOI process even easier. We’re focused on streamlining the process to improve the end-to-end experience, âsays Christy.
Reily says OnDeck isn’t just a fintech lender; it is also a lender dedicated to small businesses.
âThe two combined mean that we are able to provide exactly what small businesses need: access to finance quickly and efficiently,â he says.
âAs a fintech, we leverage the latest technology to provide streamlined application and approval service. Instead of asking small businesses and their brokers to fill out tons of paperwork, we’re only asking that bank statements be uploaded to the secure OnDeck portal. From there, we use our internal risk assessment algorithm, The KOALA Score â¢, to decide on an application. “
Reily says OnDeck takes a very different approach from traditional lenders, who look back and often ask for previous years’ tax returns when making a lending decision.
“This approach is particularly irrelevant during the pandemic, as, as we have seen, businesses can be shut down for several months during shutdowns and then experience a dramatic increase in revenue once restrictions are lifted.”
Thanks to the technology, OnDeck is able to provide a rapid response to loan requests, explains Reily.
âWith our Lightning Loans, brokers can make a decision on their client’s request in as little as 30 minutes, with funding in just two hours.
This is considered to be one of the fastest and most accurate loan decisions in the small business market.
“It’s much faster than banks, which can take weeks to get back to a broker regarding a small business loan application.”
Christy says 2021 has been a year of incredible growth for 86,400.
âWe have added many other aggregator partners this year – PLAN, FAST, Choice and Finsure. We recently hit $ 1 billion in mortgage balances, and September 2021 was by far our biggest month of requests. “
Being a purely digital bank means that 86,400 were already well placed to tackle the challenges of COVID-19.
âWe didn’t have to make any changes for COVID-19 because our process never dealt with physical documents, and we don’t require a broker to meet with a client in person.
“The introduction of OCR Labs, however, has helped a lot with this latest COVID outbreak, as applicants complete the VOI on their mobile themselves – it’s a two-minute task.”
As Australia emerges from pandemic lockdowns, Christy says the opportunities for 86,400 are endless.
âWith the support of NAB and our team who are still working to refine our processes, we are poised to become an even stronger force in the mortgage market going forward. “
NAB’s stake in 86,400 and the merger with UBank will also strengthen fintech.
âWe will be able to go faster and provide more and more features and improved functionality, to provide an even better experience for our brokers and their clients. “
Christy explains why 86,400 is so well positioned to help brokers and their clients with their finances in the months and years to come.
âWe have a very strong and passionate distribution team and a strong customer service ethic. We have competitive products and costs. And we’re working hard to further streamline our process to make getting approval faster.
Recent technological innovations from OnDeck – the KOALA Score â¢ credit scoring tool and Lightning loans – are game-changers for the lender.
âThe KOALA Score â¢ is something we’re really passionate about,â says Reily. âDeveloped in-house in 2020 by our team of data scientists, it uses a sophisticated blend of big data, predictive analytics and statistical techniques in combination with data from multiple credit bureaus, including illion and Equifax, to build a holistic image of a small business and support a more appropriate risk assessment.
The KOALA Score â¢ gives OnDeck the ability to analyze the personal credit scores of business owners – a unique feature of the new credit model.
âThis is a plus for new businesses, sole proprietorships and partnerships, which typically don’t have the large volume of business data required by traditional lenders. “
Reily says the development of The KOALA Score â¢ led to the launch of OnDeck’s Lightning Loans, which are available for unsecured funding of up to $ 100,000.
âThese are super-fast loans, with financing in as little as two hours. This is a plus for brokers and their clients as it allows the broker to close the deal earlier, while giving the business the funds it needs to seize immediate opportunities without delay.
OnDeck does not ask for a loan guarantee – just an administrator guarantee. Reily says this is different from many lenders who require property, often the business owner’s house, as collateral for a business loan.
Recognizing how difficult this has been for businesses during COVID, OnDeck offered four-week repayment leave to all new customers and new loan customers in September and October.
âThis has supported the growth of brokerage businesses and the cash flow needs of their small business clients. “
OnDeck research found it could help brokers extend their business loans, with one in five small businesses more likely to take out a loan if they had a repayment holiday option.
Reily says OnDeck saw a 175% increase in brokerage funding for small businesses between January and June 2021 compared to 2020, when the economy reopened.
âWe expect to see the same increase in activity as restrictions ease in NSW and Victoria – potentially even more so as the lifting of lockdowns coincides with the start of the holiday season and the reopening of international travel.
“There is a lot of pent-up consumer demand, and consumer spending will spill over into business investment, benefiting all aspects of the economy.”
In September 2021, OnDeck saw a 33% increase in NSW small business loan applications in September compared to the previous month.
âThe bottom line for brokers is that small business loans are definitely worth adding to their suite of services. The opportunities over the next 12 months will be impressive.
Reily says OnDeck is well positioned to help brokers and their small business clients in a variety of ways.
These include providing funding for loan sizes that are not of interest to the big banks – the average Lightning loan size is $ 62,000 – as well as fast and efficient funding with no security required (just collateral. director).
The lender also provides extensive support to brokers through its team of business developers and loan writers specially selected and trained to work in OnDeck’s brokerage business.
âFor brokers new to small business loans, our experienced team can take a broker client’s scenario and do the heavy lifting for them – and brokers only deal with one person. “